Jones Truck Lines v. Transport Ins. Co.

The court holds that although the costs the insured voluntary incurred in cleaning up its dioxin contaminated land are "damages" as that term is used in its general comprehensive liability insurance coverage, the "owned property exclusion" clause precludes coverage for expenses incurred in remedying damage to the insured's property not necessary to prevent off-site contamination. The insured voluntarily incurred approximately $ 320,000 in the investigation and cleanup of its trucking terminal facility in Missouri after learning that the Environmental Protection Agency (EPA) had listed the site as possibly contaminated with dioxin. The court first holds that because the insurance policy at issue does not have a choice of law provision, Missouri substantive law controls because the insured site is located in Missouri and Missouri has the most significant interest in the outcome of this litigation. The court next holds that plaintiff's cleanup costs constitute "damages" under the policy. The court holds that it will defer to the Eighth Circuit's holding that damages do not include cleanup costs under Missouri law only if the Eighth Circuit did not ignore clear signals from state courts and clearly read state law. The court hold that based on Missouri case law the term "damages" includes cleanup costs, which is consistent with a meaning that would ordinarily be understood by a layperson buying and paying for such a policy. The court next holds that the policy's owned property exclusion does not preclude coverage of costs for abatement actions on the insured's property designed to prevent damage to third parties, but elements of the claim that relate solely to remedying damage confined to the insured's property and not to prevent off-site contamination are not covered. The court finds evidence that the groundwater was not contaminated and that migration to adjoining properties was highly unlikely, and holds that genuine issues of material fact exist as to whether remedial measures relate solely to damage to the insured's property. The court next holds that the "legally obligated to pay" clause does not bar the insured from coverage for voluntarily assuming cleanup costs, because EPA had sent a draft consent order to the insured indicating the pending Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act based cleanup, and the insured's prompt remedial action was more expeditious and cost effective than EPA could have done. Finally, the court holds that the assignment of the coverage occurred after the contamination and cleanup, and thus the general "no assignment" clause in the policy is not applicable because the loss accrued first.